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ALEC’s Award-Winning Study Ranks Economic Competitiveness in the 50 States

TOPEKA, KS (June 22, 2011) — The American Legislative Exchange Council (ALEC) and Kansas Gov. Sam Brownback announced the release of the highly anticipated fourth edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index. This new study explains how states can most effectively drive economic growth, create jobs, and improve the standard of living for their citizens. Rich States, Poor States provides state legislators with a valuable resource for realistic, responsible state policymaking. Sustainable government spending and pro-growth tax policies are more critical than ever, as unemployment remains high and the economy is slow to recover.

“It is true that the policies of the federal government have a direct effect on the economic environment of the entire country, but governors and legislatures are not rudderless. We can and must start to change our country’s economic course by providing an environment that rewards our citizens for their efforts and their risks. The founders of our country understood that a republic with its multiple states was the perfect incubator for vetting competing approaches to public policies. ALEC’s Rich States, Poor States illustrates the outcomes of various tax policies at the state level throughout the country,” said Gov. Brownback.

The award-winning Rich States, Poor States is widely used by state legislators of all parties and affiliations. It analyzes the real effects of current policies within each state and ranks the states according to their economic growth. The publication outlines two sets of state rankings. An economic performance ranking is based on the past ten years of economic data and takes into consideration income, population and job growth. An economic outlook ranking uses 15 policy variables, including various tax burdens, recently legislated tax changes, regulatory burdens, and labor policy.

The authors analyze state policies to determine just what problems exist within the states. World-renowned economist and co-author of the report Dr. Arthur B. Laffer explains that “current state budgets are unsustainable, and we can’t blame the problem on insufficient tax revenue.” Laffer advises, “Increasing taxes on productive activities, such as working, saving, or investing only discourages economic output and diminishes the potential for real economic recovery.”

Laffer and his co-authors, Stephen Moore, senior economics writer at the Wall Street Journal, and Jonathan Williams, director of ALEC’s Tax and Fiscal Policy Task Force, show what happens when the government dictates economic transactions. States that have increased their tax rates, spending programs, and business regulations have only aggravated their economic plight. Data from the latest U.S. census reveals how taxpayers vote with their feet, moving to states with greater economic freedom and more competitive business climates.

While attempts to restrain government budgets have encountered some hostility, the facts speak for themselves. “The American people have had enough of expanding taxes and reckless government spending,” says Moore. “American families have tightened their belts, cut expenses, and paid off debts. They expect the same from the government-sector.”

“After years of excessive state spending, we are now witnessing a nationwide effort to rein in government spending and introduce fiscally responsible practices,” says Williams. “Many of the states that have chosen to live within their means have been able to develop attractive climates for new investment. States cannot spend, borrow, or tax their way into prosperity.”

“Rampant government spending and widening deficits continue to drag down our states and our citizens,” says Indiana State Sen. Jim Buck, chairman of ALEC’s Tax and Fiscal Policy Task Force. “Bloated government programs, not to mention the trillions of dollars in unfunded pension liabilities for government employees, will hinder and even prevent economic recovery. The policies we enact now will affect generations to come. As elected officials, we need to remember that it is our duty to protect the taxpayers.”

Find out where your state ranks in the ALEC-Laffer Economic Competitiveness Index and learn more about the policies that will lead to growth and prosperity in this year’s edition of Rich States, Poor States. The full-text PDF is available for free on ALEC’s website: www.alec.org/RSPS. Also, a hard copy version of the book is available for purchase.

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The American Legislative Exchange Council (ALEC) is the nation’s largest nonpartisan individual membership association of state legislators, with nearly 2,000 state legislators across the nation and more than 100 alumni members in Congress. ALEC’s mission is to promote free markets, individual liberty, and federalism through its model legislation in the states.